The dissertation will be defended at University level Council of DissertationAssessment at Vietnam Institute for Development StrategiesTime: ............, date ............. month .............., year 2019

The dissertation could be found at:- Vietnamese National Library- Library of Vietnam Institute for Development Strategies

1INTRODUCTION1. The reason for choosing the topicVinh Phuc province is one of the localities attracting foreign directinvestment (FDI) into the country. Thanks to attracting a lot of FDI capital,the economy of the province has increased significantly, the industry of theprovince has changed towards the progress of export value and budgetrevenue has increased relatively quickly, many jobs have been created ...but when assessing the role and economic efficiency of FDI in the province,it is still limited, both current and future have the pressure to improveeconomic efficiency of FDI. So far, how to attract more FDI and how tomake the FDI sector more effective for Vinh Phuc is an unknown issue. Atthe same time, in the whole country as well as at the local level, there is noresearch on the economic efficiency of FDI in a systematic andcomprehensive way; especially, there is no research project of a doctoralthesis. Facing such situation, the PhD student dicided to chose the issue of"Economic efficiency of foreign direct investment in Vinh Phucprovince" as a PhD thesis in development economics.2. Objectives and research tasks of the topic2.1. Research objectives: Clarifying the main theoretical issues abouteconomic efficiency of FDI in the province to apply to the study of FDI inVietnam's localities. Proposing solutions to improve the economicefficiency of FDI in Vinh Phuc province by 2025 with scientific bases;thereby providing more scientific basis for local authorities in planning thepolicy of attracting FDI, renewing the management of FDI enterprises andimproving the economic efficiency of FDI in the coming years.2.2. Research tasks: To achieve the goal, the thesis will successfullyimplement the main tasks: (1). Develop a theoretical basis for economicefficiency of FDI in the province to create a theoretical basis to study thethesis (in particular, to clarify the economic effect of FDI, the factorsaffecting economic efficiency of FDI and assessment of economicefficiency of FDI. From this requirement will have to conduct an overviewof the published research results at home and abroad. (2). Determiningclearly the achievements, limitations, weaknesses and causes of theeconomic efficiency of FDI in Vinh Phuc province is still low in the period

2of 2006-2017. (3). Proposing solutions to improve economic efficiency ofFDI in Vinh Phuc province until 2025.3. Subjects and scope of researcha. Research object: The research object of the thesis is FDI andeconomic efficiency of FDI in Vinh Phuc province (placed in relation tostate management on FDI and with the local economic development. ).During the research process, the thesis has observed the FDI investment ofthe whole country as well as some other provinces when necessary andpossible.b. Research scope:- In terms of science: Researching both theory and practice, bothcurrent and future economic efficiency of FDI (placed in relation toeconomic development efficiency and development investment efficiency),the factors affecting the economic efficiency of FDI, economic efficiencyindicators of FDI; status, future economic efficiency of FDI and solutions toimprove economic efficiency of FDI to 2025 in Vinh Phuc province. Thethesis only focuses on studying the economic efficiency, social efficiencyand environmental effectiveness of the thesis mentioned only in thetheoretical part for systematic. The spillover of FDI enterprises is also animportant issue when assessing the contribution of FDI enterprises to theprovincial economy but due to the lack of data, the dissertation addressesthis issue with the possible efforts. The loss caused by FDI to the provincialeconomy (through transfer pricing, to overcome environmental pollution ...)is also a necessary issue when researching the contribution of FDI to VinhPhuc's economy but not There are data, so the thesis only mentions to helplook at the problem in a comprehensive way, but cannot analyze it deeply.- In terms of time: Current status of research from 2006 to 2017 andfuture research to 2025.- In terms of space: Vinh Phuc Province and when conditions permit,it will analyze and compare with other relevant localities.4. Research frameworkImplementing the principle of approaching the system and from theviewpoint of adherence to the logic of thesis, the thesis developed thegeneral research theoretical framework as shown in Figure 1 andapproached the system throughout the research process.

3Objectives of the study

Review

Research tasks:1. How is the economic efficiency of a province's FDIunderstood? How do factors affect the economic efficiency ofFDI? and What are the indicators of economic efficiency ofFDI?2. What is the status of economic efficiency of FDI andeconomic efficiency prospects of FDI in Vinh Phuc? What isthe cause of the unsatisfactory economic efficiency of FDI inVinh Phuc?3. How to improve the economic efficiency of FDI in VinhPhuc province? Which solution is the most importantsolution?

Conclude&recomment

Figure 1: Research frameworkSource: Author5. Major contributions of the thesis- In terms of theory and scholarship: The thesis proposes a newconcept of economic efficiency of FDI (not only economic efficiency ofFDI enterprises but also FDI enterprises' contribution to the economy.economy of the province); points out factors affecting the economicefficiency of FDI (in which state management and technology used by FDIenterprises are more important); specify the evaluation content anddetermine the criteria for evaluating the economic efficiency of FDI.- In terms of practicality: Detecting limitations (economic efficiencyof FDI is low, slow and unstable). Pointing out the main reasons (statemanagement still has many shortcomings, FDI enterprises are small andmany FDI enterprises use low technology ...). Providing a scientific basisfor planning FDI attraction policies, renewing FDI management and givingsolutions to improve the economic efficiency of FDI in Vinh Phuc provincein the process of economic development. of this locality until 2025. At thesame time, propose the work of local authorities to improve the economicefficiency of FDI in Vinh Phuc province in the coming time.6. Approaches and research methodsThe approach of the thesis is approaching the system, going fromtheoretical research to analyzing the economic efficiency of FDI; go from

4cause to effect; then proceed to propose solutions to improve the economicefficiency of FDI in Vinh Phuc province by 2025.To complete the thesis, the author uses common methods such as:System analysis method; Methods of statistical analysis; Forecast method;Method of using experts; Analysis method according to SWOT model;Methods of policy analysis; Comparative method; Minimum squares method.In the process of researching the thesis, the author also uses a number of othermethods, such as separation, interpretation and inductive; At the same time,use a combination of methods to limit the defects of each method as well asto ensure the reliability needed for research results as set out.7. Structure of the thesisIn addition to the introduction, conclusion and list of publishedscientific works; The content of the thesis is divided into 4 chapters. Detail:

5CHAPTER 1: LITERATURE REVIEW OF SCIENTIFICRESEARCH RELATED TO ECONOMIC EFFICIENCY OFFOREIGN DIRECT INVESTMENTFollowing closely the study of theory and practical experience for thedissertation, the author conducted an overview of 98 documents (including10 foreign documents and 19 doctoral dissertations) and selected two largegroup of issues, mainly aimed at useful service for the study of the thesis.Detail:1.1. Overview of development investment and foreign direct investmentPerceptions and conceptions of domestic and foreign scholars ondevelopment investment and FDI are the right ideas and views that theauthor can inherit for his research.In general, scholars emphasize the role of development investment(including FDI). The consequence of development investment is theeconomic structure that economic structure plays a decisive role in socioeconomic development. Development investment is the act of taking a sumof money to perform one or several actions for development.FDI capital is part of social development. This investment is carriedout by foreign investors with the desire to gain profits and contribute to thenational (or local) socio-economic development to attract FDI.1.2. Overview of economic efficiency of development investment andeconomic efficiency of FDIIn this section, the author reviews the perceptions and perceptions ofeconomic efficiency of FDI; Factors affecting and system of economicefficiency indicators of FDI.The review pointed out that, in general, scholars mentioned muchabout the effectiveness of development investment, not to mention theeconomic efficiency of FDI, especially the economic efficiency of FDI of alocality. There has been almost no research on the economic efficiency ofFDI in a systematic and complete way. Some scholars refer to theimplications of the economic efficiency of FDI, but they identify theeconomic efficiency of FDI with the contribution of FDI to the developmentof the economy. At the same time, they only mentioned the economicefficiency of FDI at the general level as well as not placing the economicefficiency of FDI in the organic relationship with the effectiveness of

6development investment as well as the efficiency of economic development.They have not linked the economic efficiency of the FDI sector with theefficiency of the FDI sector to the national economy. In general, scholarsmentioned factors affecting the economic efficiency of FDI from a traditionalperspective and said that these are natural, economic, social, investment andmarket weaknesses. They have not considered under the perspective of actorsand impact forces to attract FDI and economic efficiency of FDI. Theyanalyze the effectiveness of development investment as well as the economicefficiency of FDI through a series of indicators, in which they mention: (1)Efficiency of investment and economic efficiency of FDI; (2) Thecontribution of development investment as well as FDI to the economy(contributing to economic growth; increasing labor productivity; improvingthe structure of the industry; improving technology; increasing the opennessof the economy. create new jobs and reduce unemployment, reduce poverty,reduce social evils, traffic accidents and occupational accidents. The authorfinds that such indicators are too many; in those indicators, there are manydifficult indicators because of the lack of data and some unquantifiableindicators. Those are the points that can be inherited for the thesis. Besides,the author also identified issues that scholars have not adequately studied aswell as identified issues that the dissertation must study in depth.

7CHAPTER 2: THEORETICAL FOR ECONOMIC EFFICIENCY OFFOREIGN DIRECT INVESTMENT ON PROVINCIAL LOCATION2.1. Economic efficiency of foreign direct investment in the provinceEfficiency is a key issue of economic development as well as ofdevelopment investment. From a theoretical perspective, economic efficiencyof FDI is a measure to assess FDI attraction, activities of FDI enterprises andevaluation of the State's FDI policies. The higher the efficiency, the better theperformance of FDI enterprises and the State's FDI policy is correct and viceversa. Economic efficiency of FDI is part of development investmenteffectiveness; but the efficiency of development investment is an integral partof the economic development efficiency. Therefore, it can be said that theeconomic efficiency of FDI is part of the efficiency of economic developmentof the country or of each locality. Economic efficiency of FDI is a part ofaggregate efficiency, including economic efficiency, social efficiency andenvironmental efficiency. These parts closely relate to each other, reflectingseparate but overlapping aspects. In particular, when it comes to economicefficiency, it means the social and environmental efficiency; or when it comesto social efficiency and environmental performance, it refers to its roots aseconomic efficiency.Economic efficiency of FDI contributes to the overall efficiency ofdevelopment investment and economic development. Economic efficiency ofFDI is closely related to local economic growth. Localities in our countryalways want to attract FDI so that it is highly effective. The process of FDIattraction has taken place since 1988. In fact, it has been pointed out that, fornearly 30 years (1988-2017), FDI has a great impact on the economicdevelopment of our country and many provinces (in which Vinh Phuc): makingadvanced technology, many industries and services appear and new productsappear, expanding export markets and forming highly skilled labor force ...Economic efficiency FDI is understood as a combination of directeconomic benefits brought to businesses and economic benefits of FDIcontribution to both the national or local economy due to investment andproduction activities. Its business brings. In other words, the economicefficiency of FDI consists of two basic parts: the economic efficiency of FDIenterprises themselves and the contribution of FDI enterprises for economicgrowth (including development and attraction). domestic enterprises) of the

8whole country or of the whole province. Accordingly, it shows that economicefficiency of FDI is closely related to economic growth. That is a proportionalrelationship. The higher economic efficiency of FDI contributes to higheconomic growth and vice versa, if the economic efficiency of FDI is low, itwill also make economic growth low.Governmentpolicy andprofitability

Domesticinvestment

Income

Job

Purchasingpower

Scaleandspeed

Foreign DirectInvestment

FDIinvestmentstructure

Financial interestand potential offoreign investorsngoài

Manufacturing(and technology)

Economic growth

InternationalmarketexpansionAccumulation

Stable macro and improve nationaleconomic autonomy

Invest

Increase the scale ofGDP and GDP/person

Figure 2.2: Relationship between FDI and economic growth and effectsinteractionsNote: ---- The road is interactive and only the opposite direction;Road only influencesSource: Author2.2. Factors affecting economic efficiency of foreign direct investmentin the provinceUnlike the works that have been reviewed, the author does not approachthe problem in the traditional way but according to the new way and vision.The author argues that there are several basic elements that affect the economicefficiency of FDI. They are: State, Enterprise, market and globalization along

9with the new generation FDI trend, geographic location and technicalinfrastructure. Among these factors, the State factor (including centralgovernment and local government) has the decisive significance to theeconomic efficiency of FDI. Law on FDI, particularly FDI policy (there are 2groups: a). Policies for FDI attraction, FDI investors (mainly attractivecommitments) and b). Policies for active FDI enterprises (mainly incentivesand restrictions) have a great influence on the economic efficiency of FDI. Ineach development period, each factor has an effect on the economic efficiencyof FDI at different levels.Investment guidelines

1. StateEconomic policy andinvestment

4.geographiclocation

Developing infrastructureand human resources

Economicefficiencyof FDI

3.Market2. Enterprise(FDIenterprise anddomesticenterprise)

Investment decision

Make investment

Figure 2.3: Diagram of factors affecting the economic efficiency of FDISource: AuthorFDI enterprises themselves play a big role in the decision ofeconomic efficiency of FDI in the province. When large-scale FDIenterprises, using high technology, using less land, less electricity andattracting many domestic enterprises, doing genuine business will certainlyhave economic efficiency and vice versa.2.3. Indicators for evaluating economic efficiency of foreign directinvestment in the provinceOn the basis of clarifying the theoretical and practical considerations,the author identifies two groups of quantitative indicators mainly used toassess the economic efficiency of FDI for localities in the context of Vietnam.

10a) First group: Indicators of Economic efficiency for the FDIsector itself.This can be seen as a set of indicators reflecting the developmentefficiency of the FDI sector. They represent quantitatively the economicefficiency of FDI. Specifically include 03 indicators:(1). Effective of using a labor force in the FDI sector (laborproductivity in the FDI sector);(2). Effective use of an FDI investment capital. There are twoindicators reflecting this problem: The average value-added index perinvested capital of the FDI sector and the ICOR index of the FDI sector.(3). Rate of return on business capital and rate of return on revenueIn addition, if conditions permit, it is possible to further analyze theaverage value added per Kwh of electricity and the efficiency of using onehectare of occupied land or the value-added index made on one hectare ofland. FDI sector occupied.b) The second group: Contribution of the FDI sector to theprovincial economy.They are measured by the contribution rate of the FDI sector to thenational economy. This group of indicators includes 6 indicators:(1) FDI sector's contribution to the province's economic growth;(2) FDI sector’s contribution to social labor productivity of theprovince;(3) FDI sector's contribution to the openness of the economy;(4) FDI sector's contribution to the provincial budget revenue;(5) FDI sector's contribution to job creation of the whole economy;(6) Spreading level of FDI enterprises to the provincial economy (theextent of FDI infusion to the provincial economy through the number ofdomestic enterprises linking production and business with FDI enterprisesand the level of contribution improve the technological level of theprovincial economy, the elasticity ratio between the profit rate and thebudget of FDI enterprises and the elasticity ratio between the profit rate andthe employee's income makes sense important when analyzing thecontribution of FDI to the provincial economy; In addition, it is possible tofurther analyze the contribution of the FDI sector to the total socialinvestment capital of the province.

11For FDI attraction, the above 6 indicators are of great significanceand extremely important. If these indicators have a higher value, the betterand vice versa.

CHAPTER 3: SITUATION OF ECONOMIC EFFICIENCY OFFOREIGN DIRECT INVESTMENT IN VINH PHUC PROVINCEPERIOD 2006-20173.1. Factors affecting economic efficiency of foreign direct investmentin Vinh Phuc province3.1.1. Elements of Vinh Phuc province itselfAccording to the content presented in chapter 2 and from theperspective of considering the level of factors to the economic efficiency ofFDI in Vinh Phuc province, the author clarifies the elements of the provinceitself and the influence of they affect the economic efficiency of FDI in theprovince. On the basis of using the SWOT model, the author examines thesignificance of the geo-economic position, the formation of a new urbanarea, and the unique tourist areas, near the Hanoi Capital, easily connectingwith Noi Bai international airport, capable of coordinating developmentwith Hai Phong, Quang Ninh, Lao Cai, provinces in the Red River Delta ...and draw some basic statements:a). In terms of advantages: Overall, Vinh Phuc is close to Hanoi andassociated with the Red River Delta provinces with a market with greatpotential, there is a new urban area Chua Ha belonging to Vinh Yen city,there are quarters Tam Dao's famous tourism, where the resort of Dam Vacand Dai Lai is both beautiful and attractive, has many golf courses ... Theseare the factors that meet the needs of accommodation, entertainment, verygood relaxation, steaming. leading FDI investors.Vinh Phuc has great potential and a variety of natural resources foreconomic development in a comprehensive way with large scale and richgoods, attracting investors. First of all, it is necessary to mention theconstruction land fund (the potential is considerable in terms of area size andmost of the land is infertile, the land is not as good as in many parts of the

12Red River Delta). Secondly, it is a very unique and very great tourismpotential to develop tourism to become a spearhead economic sector of theprovince known for its large-scale tourist attractions and entertainmentcomplexes (most clearly as in Tam Dao, Dai Lai, Dam Vac ..). Thirdly, nearthe large consumer market, it is near and easy to receive the support of highquality human resources, advanced technology... from big economic centers urban areas.b). In terms of difficulties: For Vinh Phuc, the author emphasizessome major difficulties as follows: (1) The transport system has beenimproved but still does not meet the requirements of large-scaledevelopment and with high speed. The system of technical infrastructure forelectricity, water and waste treatment is lacking; (2) Although the laborforce is abundant, the quality is still low, lack of skilled labor force, andlack of good entrepreneurs; (3). The size of the economy is still small, thepossibility of internal capital accumulation is not large; therefore the abilityof self-capital is limited; not enough to establish a large-scale enterprise, theability of enterprises to cooperate with foreign countries is limited.However, these restrictions can be overcome.3.1.2. External factors affect the economic efficiency of FDI inVinh Phuc provinceThe author analyzes in depth the impact of globalization, the impact ofthe industrial revolution 4.0 and the opportunity to bring from free tradeagreements that Vietnam has signed with countries to the ability to collectattracting FDI and economic efficiency of FDI in Vinh Phuc province. At thesame time, analyzing the socio-economic development strategy, the strategyof attracting FDI capital of the whole country affects the economic efficiencyof FDI in the province. Specifically, please emphasize some issues:- Globalization affects the attraction of large economic groups, hasfinancial potential and uses high technology to develop key products, develophigh-tech fields to modernize the foundation. economy of Vinh Phucprovince.- The industrial revolution 4.0 brings opportunities to attract FDIprojects in the direction of contributing significantly to the modernization ofthe economy and modernizing local governance in Vinh Phuc.

13- Vietnam's socio-economic development strategy and strategy ofattracting FDI to 2030 mean to define the policy of attracting FDI capital ofVinh Phuc province as well as other localities. Vinh Phuc needs a plan toattract FDI in the context of competition among provinces as well asinternational competition in attracting FDI.3.2. The situation of investment and economic development in VinhPhuc province3.2.1. Situation of development investment in Vinh Phuc provincein the period of 2006-2017For Vinh Phuc as well as for localities, investment has played anextremely important role in the socio-economic development of each locality.In 12 years (2006-2017), total social investment reached about VND 114trillion (2010 price). Average investment capital increased by an average of18% / year (of which the period of 2006-2010 was about 18.9% and of theperiod of 2011-2017 about 17.5%). Of the total social investment capital, thestate budget capital source has gradually decreased (from 46.9% of the 20052010 period to 39.7% of the 2011-2017 period); the proportion of domesticprivate capital increased from 22.2% to 30.6% and the proportion of FDIcapital decreased slightly (from 30.9% to 29.7% over the same period).3.2.2. The situation of restructuring and economic development ofVinh Phuc province in the period of 2006-2017In principle, economic structure is a consequence of developmentinvestment. In other words, the investment structure makes sense to form andchange the economic structure of the locality or the nation. In the 2006-2017period, the economy of Vinh Phuc province has made impressive progress.The economic scale of the province ranks 15th in the country, GRDP / personhas reached about 2400 USD, the average annual economic growth rate in theperiod of 2006-2017 reached about 11%, the export value reached more than1 billion USD and contributes to creating an opening of about 145% for theeconomy, the unemployment rate is about 3% and the poverty rate is low atabout 3.5%. For many years, GRDP in the province has grown relatively fast,the average GRDP growth rate in the period of 2006-2010 is about 10.8% peryear and in the period of 2011-2017 is about 12.2%.In the 2006-2017 period, Vinh Phuc's economic structure shiftedrelatively quickly: the agricultural sector decreased by 9.7%, the industrial

14proportion increased by 1.8% and the service sector increased by 7.9% . Theproportion of FDI sector increased from about 21.8% in 2005 to about 26.2%in 2017. The proportion of advanced technology products increased fromabout 13.8% in 2005 to about 21.1% in in 2017. In the period 2006-2017, theindustry contributed mainly to economic growth (accounting for about58.8%), followed by the service sector contributing about 37.3%. The hightech sector contributes about 21% in 2017 and is mainly generated by the FDIsector (contributing about 86% of the total 21%).Vinh Phuc ranked first in motorbike assembly and camera production,the third in computer assembly and production, 6th on automobile assembly,ranked 7th in beer and beverage production ... Labor density industryincreased significantly from over 9.1% in 2005 to about 34.1% in 2017. FDIsector developed strongly, in 2017, it accounted for only 10.2% of the totalsocial labor but contributed to changing the picture of social division of laborin the province. The province has formed 12 industrial parks, 1 tourist area, 1golf course. High-speed motorway running through the province has beencompleted. That is an important premise to attract investors outside theprovince.In the last 12 years (2006-2017), the picture of social division of laborhas made clear progress and towards industrialization and modernization. Thetrend of social labor division has improved, the proportion of non-agriculturalsectors has increased over the years, reaching about 51.5% in 2017;Particularly, industrial labor increased the most, from more than 18.9% in2005 to about 30.1% in 2017. FDI enterprises make an important contributionto the renovation of social labor division.3.3. Current status of economic efficiency of foreign direct investmentin Vinh Phuc province3.3.1. The situation of attracting foreign direct investment in VinhPhuc province in the period of 2006-2017In recent years, Vinh Phuc has achieved many results in attracting FDI.Total realized FDI has always increased over the years and tends to change inthe structure towards more progressive: no longer unique for the industrialsector as in previous years but has opened to the tourism area. , high-endentertainment, agriculture and services. The number of FDI enterprises

15increased rapidly and especially FDI enterprises in the field of export productproduction increased significantly in terms of quantity and capital scale.FDI attraction of Vinh Phuc has other important points compared tothe whole country. That is, although FDI capital attracted to agriculture,tourism, infrastructure ... remains low, but the implemented capital ratio ishigher than the national level.3.3.2. Current status of economic efficiency of foreign directinvestment in Vinh Phuc province3.3.2.1. Economic efficiency of the foreign direct investmentsector itself(1). Labor productivity of FDI sector: Labor productivity of FDI sectorhas increased continuously, reaching a higher level than the average level ofthe whole province. From 2005 to 2010, the labor productivity of the FDIsector was about four times higher than the average labor productivity of boththe provincial economy and about 4 times, but by 2017, it was only about 2.5times higher than that of the provincial economy. with domestic laborproductivity. In 2017, labor productivity in FDI sector is only about 3 timeshigher than that of domestic economy. That may explain that FDI enterpriseshave not innovated technology significantly, they mainly use technologyinitially when they bring to Vietnam.(2). Effective use of investment capital of FDI sector: reached a betterlevel than the average of the province as well as the average of the country.This is reflected in the following important aspects:- ICOR index: decreased from 3.58 of the period 2005-2010 to 3.54 ofthe period 2011-2017; lower than the average of the whole province (about0.87 compared to the corresponding level of the whole province in theperiods of 3.95 and 4.02) and lower than the national average.- Average value added per 1 FDI investment capital: about 0.4-0.45 in12 years (2006-2017); about 1.4 times higher than the provincial average.Although this is not a large level, it also shows that the economic efficiencyof FDI in Vinh Phuc is quite good.(3). Profit rate of FDI enterprises: Indicators of profit rate onproduction capital and on revenue as well as average income per employeetend to increase and exceed the average level of FDI enterprises. country.

16Particularly, the average income per employee of FDI enterprises in VinhPhuc is lower than the national average.Table 3.20: Profit rate and average labor income of FDIenterprisesCriteria

20052010FDI enterprises in Vinh Phuc1. Rate of return on production capital, %9,57,12. Rate of return on revenue, %8,69,5FDI enterprises in Vietnam1. Rate of return on production capital, %14,257,432. Rate of return on revenue, %14,28,843. Average of labor income per month,2.173,24.248,7103VNĐ

2015

2017

7.64,1

7,76,9

7,87,207.297,8

8,87,989.740,9

Source: The author calculated according to data on FDI enterprises of theGeneral Statistics Office and the Statistical Yearbook of Vinh PhucProvince 20173.3.2.2. Contribution of the foreign direct investment sector tothe economy of Vinh Phuc province(1). FDI sector contributes to increasing the scale of the economy: FDIsector has a great significance for contributing to economic growth of VinhPhuc province. The 2006-2017 period contributes about 34-35% to theeconomic growth of Vinh Phuc province (ie contributes about 4.3 - 4.5%points). This is a relatively high contribution compared to the nationalaverage (about 26-28% nationwide).Table 3.3: Contribution of foreign direct investment sector toeconomic growth of Vinh Phuc province2006-20102011-20177.1909.245 GRDP of whole province2.8683.266 GRDP of FDI sectorProportion compared to the39,934,9whole province, %Source: The author calculated according to provincial statistics [9](2). FDI sector contributes to increasing labor productivity andopenness of the economy+ FDI sector contributes to the increase of social labor productivityof the province: FDI sector has contributed significantly to increasing labor

17productivity of Vinh Phuc province. If in 2005, FDI sector contributed18.4%, in 2017, FDI sector contributed about 30% to increase laborproductivity of Vinh Phuc province (the average level of the country in2017 was about 26%).+ FDI sector contributes to increasing the openness of the economyin Vinh Phuc province: To better identify the competitiveness of theeconomy, the author calculates the province's economic openness by takingexport value divided by GRDP. For Vinh Phuc province, FDI sector hasgreat significance for the province's exports (accounting for about 78-80%of the province's total export turnover) as well as playing an important rolein competing with the world market. FDI sector contributes about 80-82%of the openness of the economy of Vinh Phuc province (this figure of thewhole country is about 70%).Table 3.5: FDI sector contributes to the opening of the economyof Vinh Phuc provinceCriteria200520102017Export turnover coefficient of FDI0,780,810,84compared to total export turnover of VinhPhuc provinceThe rate of contribution to the openness of76,579,182,8the economy of Vinh Phuc provinceSource: The author calculated according to the formula proposed inchapter 2 of the presentation on the criteria for evaluating the economicefficiency of FDI.(3). The FDI sector contributes significantly to the provincialbudget. The FDI sector contributes about 50-55% on average, particularlyin 2017 FDI sector contributed 48.2%. The growth rate of the state budgetremittance of the FDI sector has always been high (in the 2006-2017 period,about 6.8% per year, calculated according to 2010 prices). There is a needto improve the role of the FDI sector in contributing to the provincialbudget in the next time.(4). FDI sector contributes to creating new jobs is also important.In the period 2006-2017, the FDI sector created jobs for about 8,300 people,equivalent to creating 9.6% of the total employment of the province (onlyabout 10% in 2017) and about 21% of jobs refresh.

18(5). The FDI sector contributes to the addition of provincial capitalfor investment and development. In the past 12 years, the FDI sector hascontributed about 28-29% of the total social investment capital it has made;This is a significant level (while this rate of the whole country is about 2224%).The loss of Vinh Phuc economy due to the transfer of FDIenterprises, although it needs to be determined, due to lack of information,the author cannot calculate quantitatively. In Vinh Phuc province, theenvironmental pollution caused by FDI enterprises is practically negligible.(6). Evaluation of the extent of FDI enterprises' spread: Thecoefficient of elasticity between the rate of return on revenue and theaverage income per employee of FDI enterprises and the coefficient ofelasticity between the rate of return on revenue and the payment The statebudget of FDI enterprises shows that the economic efficiency of FDI inVinh Phuc province is low and stable. In 2017, there are 160 FDIenterprises in the province and only 9 domestic enterprises (both small andless than 150 employees/enterprise) associate production with FDIenterprises and domestic enterprises. mainly produce packaging and someodd equipment for FDI enterprises to manufacture cars.3.3.2.3. Comprehensive evaluation of economic efficiency offoreign direct investment in Vinh Phuc provincea). Key achievements: In general, the economic efficiency of FDI ishigher than the average level of the whole province but in general it is stilllow and not stable. The FDI sector has a relatively large role in the socioeconomic development of the province (contributing 29-30% of socialinvestment capital, 15-16% of social labor, 35-36% of economic growth.and 29% increase labor productivity, 64-65% of budget revenue and 82% ofthe province's economic openness ...). Although the economic efficiency ofFDI is higher than the economic efficiency of the economy in the wholeprovince as well as some higher than the average level of the nationaleconomy, it is also much higher. This shows the need to have a solution toimprove the economic efficiency of FDI so that the economy of Vinh Phucprovince can develop faster and more sustainably in the future.

19b) Overview of major limitations and weaknesses: In general, theeconomic efficiency of FDI in Vinh Phuc province is still low, increasingslowly and unstable.Spillover effects of FDI enterprises are limited. FDI projects have notattracted domestic enterprises to develop together to create the necessaryvalue chain. There are two main reasons. That is, on the one hand,Vietnamese enterprises do not have enough conditions (in terms of rawmaterials, technology to manufacture components and accessories) toparticipate as industrial supporters. On the other hand, the giants assembledthemselves to bring components and accessories from their countries so thespread of FDI enterprises is limited. FDI projects have no connection witheach other so they do not create a common power.3.3.3. Causes of successes and limitations and weaknesses ineconomic efficiency of foreign direct investment in Vinh Phuc province3.3.3.1. The cause of success: Vinh Phuc has a favorable economicand geographical position, has many factors to meet the needs ofaccommodation, leisure, entertainment and entertainment of FDI investors;Vinh Phuc provincial government is friendly with FDI investors, wishing toattract FDI and had a policy of attracting FDI very early; Interested by FDIinvestors, at the same time, there is a response of the people in the provinceand the active participation of workers from surrounding localities to workin FDI enterprises.3.3.3.2. Causes of limitations and weaknessesa. On the State side:(1). On the central government side: The law on FDI has manyunreasonable points, which appear to be inadequate but the CentralGovernment is slow to amend; has prolonged the weakness of theinvestment environment as well as the inter-provincial infrastructure.Ministries have not worked closely together in the field of statemanagement for the FD region. For many years, the Central Governmenthas not yet had a plan for FDI investment for each major economic region;At the same time, in the planning of development of the Red River Deltaregion as well as other major economic regions, there is no close linkagebetween localities.

20(2). For Vinh Phuc provincial government: Vinh Phuc provincialgovernment has made great efforts in attracting and managing FDI but alsorevealed many limitations and weaknesses. This is reflected in the followingkey points: in the long term, Vinh Phuc's economy depends heavily on theFDI sector; to attract few transnational economic groups; The promotion offoreign direct investment has not been effective. Vinh Phuc's ranking ofprovincial competition dropped from No. 8 in 2006 to position 13 in 2010,position 21 in 2015 and position 20 in 2017; The provincial government ofVinh Phuc has not coordinated with the central branches to have regulationson investment per hectare so it does not attract high-tech projects as well asno supporting industrial development plans to promote pushing cooperationbetween FDI enterprises and domestic enterprises; At the same time, there areno strong enough commitments to attract potential and strategic investors andnot fully control the FDI situation.b. On the business and market sideIn general, most enterprises in Vinh Phuc province depend heavily onforeign markets; FDI enterprises have not coordinated with each otheraccording to the value chains, not yet shown the role of attracting domesticenterprises. At the same time, FDI enterprises have not received thenecessary support because of the lack of supporting industries. Domesticenterprises in the area are mainly medium and small scale, financialcapacity and technology are very limited and have not cooperated well withFDI enterprises.Due to the financial crisis and global economic recession as well asthe whole country, FDI enterprises in Vinh Phuc province face manydifficulties, production slows down, consumes poorer products.

21CHAPTER 4: SOLUTIONS TO IMPROVE THE ECONOMICEFFICIENCY OF FOREIGN DIRECT INVESTMENT ON VINHPHUC PROVINCE, PERIOD 2018-20254.1. Basing on building solutions to improve economic efficiency offoreign direct investment in Vinh Phuc provinceInstead of presenting an item on factors affecting FDI economicefficiency as in chapter 3, in section 4.1 of chapter 4, the author presents thebasis for building a solution.The author identifies 4 main bases:(1). First base: Market, globalization, national development strategyand provincial socio-economic development orientation to 2025(2). Second base: determined from the analysis of the causes oflimitations and weaknesses mentioned in chapter 3 and the experience ofsome places in improving the economic efficiency of FDI.(3). Third base: Orientation to attract FDI into Vinh Phuc province to2025Projects attracting Vinh Phuc province in the coming time must meetthe main criteria: High technology, clean technology, energy saving,environmentally friendly; has financial strength and has a global market forproducts; Has the ability to spread around (backyard) to form a network oflocal support businesses; There is a large investment on / ha (more than 1415 million USD / ha or more) and less land use; Using a lot of localworkers, especially local people; Attracting investors to save land andenergy; bring high efficiency to the whole economy of the province, theimpact spread strongly over many domestic sectors.(4). The fourth base: promoting the success and determination of theprovince in the coming time4.2. Solutions to improve economic efficiency of FDI in Vinh Phucprovince to 2025The author proposes 7 basic solutions. That is:(1). Solution No. 1: Publicizing the strong commitment of Vinh Phucprovincial government to foreign direct investment investors: Commitmentof Vinh Phuc provincial authorities on the interests of FDI investors;Commitment to create a competitive advantage

22(2). Solution No. 2: Select strategic investors. The authorrecommends prioritizing the selection of FDI investors in the fields ofcomputer, telecommunications, refrigeration, manufacturing medicalequipment, tourism, relaxation and treatment ... of Japan and Taiwan. ,Korea, USA, EU, Singapore ... Instead of calling on the subsidiaries of theabove-mentioned corporations, it is necessary to call for the direct presenceof those major corporations themselves. Based on the analysis, the authorproposed a list of key priority projects and selected strategic partners inattracting FDI in the period 2018-2025 of Vinh Phuc province.(3). Solution No. 3: Improving the efficiency of state management ofFDI in Vinh Phuc province. State management reform and efficiencyenhancement and state management efficiency must be implemented at boththe central and local levels. Strive to rank among the 10-15 provinces in thePCI and PAPI rankings nationwide.(4). Solution No. 4: Completing the technical infrastructure system,especially the synchronous and modern development of the connecting roadsystem in the province, the road connecting Vinh Phuc with the arterialroutes in the North and the whole country . At the same time perfecting theelectrical system, water supply, telecommunications, banking, hotels,restaurants, houses and entertainment facilities, high quality hospitals.(5). Solution No. 5: Reasonable territorial organization to meet therequirements of FDI investors. Besides completing the central urbansystem, developing tourist areas, industrial park systems, golf systems ...(6). Solution No. 6: Developing high quality human resources. From2018 to 2025, Vinh Phuc needs to train 9,000 more middle and high-levelmanagement personnel, 43 thousand entrepreneurs and 262 thousandprofessional workers. Particularly for FDI sector, there are about 1.1thousand manpower management, 8 thousand entrepreneurs and 8 thousandoccupational workers.(7). Solution No. 7: Developing a contingent of domestic enterprisesin the province. Striving in 2025 in Vinh Phuc province, there are about5,000 to 6 thousand enterprises, of which FDI enterprises alone are about630 FDI enterprises. At the same time, develop supporting enterprises(about 10-15) and about 20-25 domestic enterprises closely linked with FDIenterprises.

234.3. Evaluating the economic efficiency of foreign direct investment inVinh Phuc province in the period of 2018 - 2025Successful implementation of the orientation and major solutions aspresented, through preliminary calculation also shows that the developmentof Vinh Phuc economy has significant progress and economic efficiency ofthe above FDI. Vinh Phuc province has been significantly improved. ForFDI sector, if compared to 2025 with 2017, FDI productivity is 3 timeshigher, value added per FDI is 1.1 times higher, consuming electricity togenerate 1 USD of GDP. 20%; The proportion of FDI sector contributing tothe province's economic growth is about 1.3 times; The proportion ofcontributions to the province's labor productivity increased by about 2 timesand the proportion contributing to the increase in the openness of theprovincial economy doubled, the ICOR index decreased by about 14%.4.4. Some recommendations- The central government needs to innovate in a comprehensive andtimely manner in the formulation, issuance and implementation of the Lawon Foreign Direct Investment in Vietnam. All regulations, rules andregulations defined in such laws must be clear, transparent and quantitative;to avoid the type of rules by principle and general, leading to differentunderstandings, difficult to implement and not to build trust for FDIinvestors ...- The central government should have regulations on highinvestment rates per hectare allocated to localities near big cities to attracthigh-tech projects. The central government and the provincial governmentof Vinh Phuc need to regulate the height of space for the construction offactories of FDI projects that can build high-rise buildings.- Vietnam should organize to assess the economic efficiency of FDIin the whole country and within the provinces to have the right informationto make decisions on FDI attraction and to have comparison data betweenlocalities.